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Europe Roundup: Sterling eases on renewed Brexit concerns, dollar index slumps ahead of Trump's speech, FOMC commences monetary policy meet - Tuesday, January, 30th, 2018

Market Roundup

  • EUR/USD 0.27%, USD/JPY -0.35%, GBP/USD 0.09%, EUR/GBP 0.19%
     
  • DXY -0.17%, DAX -0.48%, FTSE -0.5%, Brent -0.19%, Gold 0.34%
     
  • EU Consumer Confidence Final Jan, 1.3, 1.3 forecast, 1.3 previous
     
  • EU Business Climate Jan, 1.54, 1.69 forecast, 1.66 previous
     
  • EU Services Sentiment Jan, 16.7, 18.6 forecast, 18.4 previous
     
  • EU Industrial Sentiment Jan, 8.8, 9.0 forecast, 9.1 previous
     
  • EU Economic Sentiment Jan, 114.7, 116.3 forecast, 116.0 previous
     
  • EU GDP Flash Prelim YY, 2.7%, 2.7% forecast, 2.6% previous
     
  • EU Cons Inflation Expectations Jan, 19.6, 13.6 previous
     
  • France GDP Preliminary QQ Q4, 0.6%, 0.6% forecast, 0.6% previous
     
  • France Consumer Spending MM Dec, -1.2%, 0.3% forecast, 2.2% previous
     
  • Italy Consumer Confidence Jan, 115.5, 116.3 forecast, 116.6 previous
     
  • Italy MFG Business Confidence Jan, 109.9, 110.3 forecast, 110.5 forecast
     
  • Japan's robust labour demand bolsters outlook for wage hikes, inflation
     
  • China's factory growth seen fading slightly in January
     
  • Oil buckles as stronger dollar bites into risk-linked assets
     
  • Gold drops on firmer dollar, higher bond yields

Economic Data Ahead

  • (0800 ET/1300 GMT) Germany reports its preliminary consumer price index for the month of January. The index is expected to edge down 0.6 percent, after gaining 0.6 percent in the previous month. On an annualized basis, it is likely to rise 1.7 percent after posting similar gains in December.
     
  • (0900 ET/1400 GMT) The S&P/Case-Shiller is expected to report that U.S. home price index of 20 metropolitan areas rose at an annualized rate of 6.4 percent in November.
     
  • (1000 ET/1500 GMT) The U.S. consumer confidence index is expected to have increased to 123.1 in January from a reading of 122.1 recorded in December.
     
  • (1630 ET/2130 GMT) API reports its weekly crude oil stock.
     
  • (1950 ET/2350 GMT) Bank of Japan Summary of Opinions.
     
  • (1850 ET/2350 GMT) Japan's preliminary Industrial Production is expected to have edged up 1.6 percent in December after increasing 0.5 percent in November.

Key Events Ahead

  • (1030 ET/1530 GMT) Bank of England Governor Mark Carney's speech.
     
  • (1130 ET/1630 GMT) European Central Bank Executive Board member Yves Mersch's speech.
     
  • (1400 ET/1900 GMT) Federal Open Market Committee begins a two-day meeting on interest rate policy.

FX Beat

DXY: The dollar index eased, giving back some of its previous session gains ahead of Trump's State of the Union speech due later in the day. The greenback against a basket of currencies traded 0.3 percent down at 89.07 having touched a low of 88.44 on Friday, its lowest since December 2014. FxWirePro's Hourly Dollar Strength Index stood at -84.71 (Slightly Bearish) by 1100 GMT.

EUR/USD: The euro rose after data showed the Eurozone economy expanded at its fastest rate in a decade in 2017, and sentiment remained high at the start of 2018. The continents estimated gross domestic product rose 0.6 percent quarter-on-quarter in the last three months of 2017, while overall in 2017, eurozone GDP rose 2.5 percent. The European currency traded 0.3 percent up at 1.2416, having touched a high of 1.2538 on Thursday, its highest since Dec. 2014. FxWirePro's Hourly Euro Strength Index stood at 17.71 (Neutral) by 1100 GMT. Immediate resistance is located at 1.2500, a break above targets 1.2590. On the downside, support is seen at 1.2307 (38.2% retracement of 1.2264 and 1.2537), a break below could drag it lower 1.2252 (23.6% retracement).

USD/JPY: The dollar slumped ahead of Trump's State of the Union speech, where he will address his proposed immigration overhaul as well as his efforts to lower trade barriers around the world for American exports. The major was trading 0.3 percent down at 108.57, having hit a low of 108.28 on Friday, its lowest since Sept 11. FxWirePro's Hourly Yen Strength Index stood at 68.98 (Bullish) by 1100 GMT. Immediate resistance is located at 109.52 (61.8% retracement of 111.49 and 108.28), a break above targets 109.90 (50.0% retracement). On the downside, support is seen at 108.20, a break below could take it lower 108.00.

GBP/USD: Sterling rebounded after falling to 1-week lows earlier in the day on renewed worries about the impact of Brexit on the UK economy and the progress of talks to exit the European Union. The major traded 0.3 percent up at 1.4110, having hit a high of 1.4345 on Thursday, it’s highest since June 2016. FxWirePro's Hourly Sterling Strength Index stood at -95.64 (Slightly Bearish) by 1100 GMT.  Investors’ focus will remain on the BoE governor Carney's speech, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.4121 (5-DMA), a break above could take it near 1.4200. On the downside, support is seen at 1.3979 (Session Low), a break below targets 1.3904 (50.0% retracement of 1.3458 and 1.4345). Against the euro, the pound was trading 0.1 percent down at 88.07 pence, having hit a low of 88.33 pence earlier in the session, it’s lowest since Jan. 22.

USD/CHF: The Swiss franc gained, reversing some of its previous session losses as the greenback eased ahead of Federal Bank policy decision due this week. The major trades 0.5 percent down at 0.9330, having touched a low of 0.9290 on Thursday, it’s lowest since August. 2015. FxWirePro's Hourly Swiss Franc Strength Index stood at 100.91 (Highly Bullish) by 1100 GMT. On the higher side, near-term resistance is around 0.9434 (61.8% retracement of 0.9666 and 0.9290) and any break above will take the pair to next level till 0.9479 (50.0% retracement). The near-term support is around 0.9260 and any close below that level will drag it to next level till 0.9200.

Equities Recap

European shares declined, weighed down by losses in cyclical sectors including mining and financials, while greenback declined ahead of Trump's State of the Union speech due later in the day.

The pan-European STOXX 600 index slumped 0.4 percent to 397.96 points, while the FTSEurofirst 300 index edged down 0.4 percent to 1,564.37 points.

Britain's FTSE 100 trades 0.6 percent lower at 7,628.88 points, while mid-cap FTSE 250 gained 0.5 percent to 20,477.06 points.

Germany's DAX fell 0.4 percent at 13,275.33 points; France's CAC 40 trades 0.3 percent down at 5,508.47 points.

Commodities Recap

Crude oil prices declined for a second day as a strengthening dollar and rising U.S. output undermined the bid tone of the prices. International benchmark Brent crude was trading 0.1 percent down at $69.30 per barrel by 1104 GMT, having hit a high of $71.25 on Thursday, its highest since Dec. 2014. U.S. West Texas Intermediate was trading 0.6 percent down at $65.13 a barrel, after rising as high as $66.63 on Thursday, its highest since Dec. 2014.

Gold prices rose after falling to its lowest in a week, as the dollar strengthened and U.S. bond yields rose, while traders awaited a U.S. Federal Reserve policy meeting for cues on interest rate hikes this year. Spot gold was 0.3 percent down at $1,344.22 per ounce by 1108 GMT, after hitting its lowest since Jan. 23 at $1,334.33, earlier in the day. U.S. gold futures were 0.5 percent lower at $1,335.20 per ounce.

Treasuries Recap

The U.S. Treasuries remained on the upside ahead of a host of events scheduled for this week – President Donald Trump is scheduled to deliver a keynote speech on January 31 by 02:00GMT and the ADP non-farm employment due on the same day by 13:15GMT. The yield on the benchmark 10-year Treasuries fell 1 basis point to 2.68 percent, the super-long 30-year bond yields hovered around 2.94 percent and the yield on the short-term 2-year traded nearly 1-1/2 basis points lower at 2.11 percent.

The UK gilts gained ahead of the Bank of England Governor Mark Carney’s speech and the country’s manufacturing PMI for the month of January, scheduled to be disclosed today and February 1 by 15:30GMT and 09:30GMT respectively. The yield on the benchmark 10-year gilts, slipped nearly 1 basis point to 1.44 percent, the super-long 30-year bond yields remained tad lower 1.89 percent and the yield on the short-term 2-year traded 1-1/2 basis points lower at 0.61 percent.

The German bunds traded nearly flat as investors wait to watch the country’s employment report for the month of January scheduled to be released on January 31 by 08:55GMT and eurozone’s consumer price inflation for the same period by 10:00GMT. The German 10-year bond yields, which move inversely to its price, slipped 1 basis point to 0.68 percent, the yield on 30-year note traded flat at 1.34 percent and the yield on short-term 2-year too hovered around -0.53 percent.

The New Zealand government bonds ended Tuesday’s session on a completely flat note despite the country registering a trade surplus for the month of December. At the time of closing, the yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 2-1/2 basis points to 2.94 percent, the yield on 20-year plunged 1-1/2 basis points to 3.44 percent and the yield on short-term 2-year ended nearly flat at 1.97 percent.

The Japanese government bonds slumped as investors have largely shrugged-off the set of lower-than-expected economic data, out this morning that offset the rise in retail sales and job-to-applicant ratio figures. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, rose nearly 1-1/2 basis points to 0.09 percent, the yield on the long-term 30-year note also climbed close to 1-1/2 basis points to 0.82 percent and the yield on short-term 2-year traded nearly flat at -0.12 percent.

The Australian government bonds slumped as the global debt sell-off continued amid hopes of a rise in the country’s fourth-quarter consumer price inflation data, which is scheduled to be released on January 31 by 00:30GMT. The yield on the benchmark 10-year Treasury note, which moves inversely to its price, jumped 1-1/2 basis points to 2.84 percent, the yield on the long-term 30-year note also surged nearly 1-1/2 basis points to 3.46 percent and the yield on short-term 2-year remained tad higher at 2.09 percent.

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February 19 13:00 UTC Released

RUReal Wages YY

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6.2 %

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4.6 %

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3.1 %

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